Design and Evaluation of a Multi-level Reactive Power Market

Abstract

The shift from conventional power plants on transmission level to distributed energy resources in the distribution grids requires procedures to enable efficient and economic reactive power exchange across different voltage levels. In this paper, we propose a multi-level reactive power market that enables reactive power provision from distributed energy resources to higher voltage levels. Each grid operator operates a local reactive power market and offers local reactive power potential, as an intermediary, to superordinate grid operators by passing on its aggregated cost curve and flexibility range. As a result, there is a low requirement of communication between the market participants and each grid operator is free to choose its local market rules as well as the optimization algorithm used. First results from a case study show that our decentralized market approach can realize an economically efficient multi-level reactive power provision that is close to a centrally computed optimal solution, without violating local grid constraints.